Farther in the past, there were noteworthy failures (below) like Mobil’s acquisition of Montgomery Ward, Exxon’s investment in Reliance Electric, and Gulf’s real estate ventures.
Mobil – Montgomery WardExxon – Reliance ElectricGulf Land – Reston
Finally, don’t expect the carbon sequestration boom that some are forecasting. As wind investors have discovered, industries dependent on mandates and subsidies are risky.
Not much unites climate activists and skeptics, but they are largely aligned in their opposition to carbon sequestration (euphemism for disposal), as are fiscal conservatives. The word chutzpah comes to mind when companies seek public funds to dispose of emissions associated with the combustion of their products.
199 oil and gas leases were wrongfully acquired at Sales 257, 259, and 261 with the intent of developing these leases for carbon disposal purposes. Repsol was the sole bidder at Sale 261 for 36 nearshore Texas tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). Exxon acquired 163 nearshore Texas tracts (blue in map above) at Sales 257 (94) and 259 (69).
BSEE’s decision to revise downhole commingling policy by increasing the allowable pressure differential between reservoirs is sound and supported by an impressive University of Texas (UT) Petroleum Engineering study. Although the announcement hype is a bit much, this is the way regulation is supposed to work.
The main benefit of commingling (vs. sequential production) is the accelerated return on investment, which is fine as long as other risks are not introduced and ultimate oil recovery is not sacrificed. The UT study of Paleogene (Wilcox) reservoirs found that downhole commingling actually maximizes per-well oil production compared to sequential schemes. Over 30 and 50 years, commingling yields 61% and 21% more oil respectively.
The UT study analyzed 3 cases with 19 variables (Table 2 in their report). The reservoir pressure differentials were 500, 1000, and 1500 psi. Interestingly, pressure differential had essentially no impact on cumulative production in either the commingled or sequential scenarios.
Figure 13. Cumulative production over 50 years for commingled (left) and sequential (right) production scheme. The most significant variables are shown in the first four pairs of plots. The last pair of plots shows the least important parameter which is pressure difference between reservoir units.
Also note that (fig. 13):
As the upper reservoir thickness increases to 1000 ft (high case), total production increases by 41% for the commingled production scheme and 26% for the sequential production scheme.
The second most important field feature is upper reservoir facies proportion for both production schemes. A higher sand proportion in the reservoir results in higher production.
The Bureau of Ocean Energy Management (BOEM) is issuing this Director’s Order to Empire Offshore Wind LLC to halt all ongoing activities related to the Empire Wind Project on the outer continental shelf to allow time for it to address feedback it has received, including from the National Oceanic and Atmospheric Administration (NOAA), about the environmental analyses for that project. BOEM received this and other feedback regarding Empire Wind as an outgrowth of the review that the Department is engaged in related to offshore wind projects. See the President’s Memorandum of January 20, 2025. 90 Fed. Reg. 8363 (January 29, 2025).
The Santa Barbara Independent doesn’t pull any punches in this article about the once invincible California Coastal Commission. I recommend that you read the entire article, but here are some choice excerpts (emphasis added):
Lastly, it’s totally unprecedented for members of the commission to verbally eviscerate energy planners with Santa Barbara County at a public hearing for refusing to provide them requested planning documents having to do with Sable no fewer than seven times. While the county has denied this charge, no one from the county showed up for last week’s meeting to explain their actions. One commissioner termed this absence a “dereliction of duty.”
What actions and outcomes ultimately emerge from this rancor remain far from obvious. That’s in part because the political support enjoyed by the Coastal Commission — long regarded as one of California’s many “third rails” of state politics — has never been so uncertain. By “uncertain,” I mean rarely has any state agency been so reviled by such a wide swath of political players and stakeholder groups.
The question has become not so much who hates the Coastal Commission — it’s who doesn’t. Donald Trump has hated the commission since it objected to a 70-foot flagpole Trump planted on a beachfront golf course he owned back before he became president.
Elon Musk, Trump’s alter ego, sued the Coastal Commission — and lost — over the commission’s outspoken refusal to grant him the “consistency determination” he needed to increase the number of SpaceX rocket launches from Vandenberg Space Force Base from 35 to 50. Although a federal judge would rule in the commission’s favor, Governor Gavin Newsom, a noted Democrat, announced he was siding with Musk on this one.
So, what happens if Sable doesn’t pay the fine? Or keeps on working despite three cease-and-desist orders? The key question — still loudly unanswered — is what Attorney General Rob Bonta will do. Will Bonta throw his considerable heft behind the commission? He hasn’t yet. And it’s been several months. Does the governor want to pick his battles with the Trump-Musk White House for causes that enjoy more broad public support?
The Government Accountability Office report on Offshore Wind Energy (full report attached) does a good job of summarizing the potential impacts from offshore wind development. They are categorized in the report as follows:
Marine Life and Ecosystems (see table pasted below)
Fishing Industry and Fisheries Management
Economic Development and Community Impacts
Tribal Resources, Including Sacred Sites and Established Fishing Grounds
Defense and Radar Systems
Maritime Navigation and Safety
Unfortunately, GAO’s recommendations, which focus on consultation and staffing (perennial favorites), are rather meaningless. Does GAO really think more consultation will resolve the fundamental concerns of the tribes and fishing industry? Does GAO really think increasing BOEM/BSEE staff is a solution? Wind was the signature offshore energy program of the previous Administration, and it was well resourced.
When the legislation authorizing offshore wind energy development was drafted, we envisioned energy alternatives that could complement thermal energy sources like gas, coal, and nuclear plants. Natural gas plants are particularly important to intermittent energy sources, because their power can be readily dispatched on demand.
Never did we expect attempts to ban the dispatchable energy sources on which renewable energy goals were dependent. Policies that limit gas production, transportation, and consumption don’t boost offshore wind development, they doom it.
In a rush to achieve the Administration’s energy goals, the wind leasing program brushed aside important economic, safety, national security, and environmental issues. Coastal residents, tribes, fishing interests, power customers, and other affected parties have rebelled. Their concerns won’t be smoothed over by increasing consultation.
So now the wind program is in a dark and windless place (a regulatory dunkelflaute?). Five projects are under construction or in the early stages of operation. Construction has been authorized for 6 other projects. Five more projects are in various stages of permitting. What next?
Meanwhile, we still haven’t seen a report on the ugly and embarrassing Vineyard Wind blade failure offshore Nantucket last July. Shouldn’t that report be a precursor to further offshore wind development in the US Atlantic? Also of note, that same turbine was struck by lightning 2 months ago.
Should directed suspension orders be issued pending a complete review of the wind program? If so, for which leases and for how long? Suspension of projects still in the permitting phase would be relatively painless and maybe even attractive given the current state of the wind industry. However, financial impacts for projects in the construction phase would be significant. These important next-step decisions need to be made soon. Muddling along is not a strategy.
Construction and survey activities produce underwater noise that can disturb sensitive marine species. Offshore wind projects take measures to mitigate underwater noise, including the use of bubble curtains to dampen pile driving sound and pausing operations if protected species are sighted.
Changes to marine habitat
Installation of infrastructure, such as turbine foundations and transmission cables, introduces new structures and causes changes to the ocean floor that can alter marine habitat and affect the distribution, abundance, and composition of marine life in the area. These new structures can create artificial habitat that may benefit some species while displacing others and could affect bottom-dwelling species through disturbing the seabed. Artificial habitat effects of wind turbines are well documented, but research is ongoing to monitor and understand impacts on marine life.
Hydrodynamic effects
Operation of wind turbines can affect hydrodynamics and ocean processes such as currents and wind wakes, but little is known about regional effects of widescale deployment on ecosystems.
Vessel disturbance
Vessels can disturb some species and pose strike risks to large marine animals, but the increase in offshore wind vessels is projected to be small compared to the total volume of vessel traffic. Offshore wind vessels are required to take measures such as following speed restrictions and employing protected species observers.
Entanglement risk
Structures, such as mooring cables from floating wind turbines, could snag fishing gear and other marine debris and create entanglement risk to marine animals. Wind projects employ measures to minimize entanglement (e.g., mooring systems designed to detect entanglement), but there is uncertainty about the extent of the risk from floating turbines because of limited deployment.a
Collision risk to birds and bats
Turbine blades pose a collision risk to some sea birds, but little is known about offshore collision risk to bats. Research on collision risks and mitigation measures (e.g., lighting and curtailment) is ongoing.
The EO requires agencies to issue a rule, effective not later than September 30, 2025, that inserts a sunset date into each “covered regulation.” The sunset date must be 1 year after the effective date of the sunset rule, but may be extended multiple times for a total of up to 5 years.
From an offshore energy perspective, the confusion starts with the EO’s applicability. One section of the order exempts regulatory permitting regimes authorized by statute. Another section specifies that the order “applies to all regulations issued pursuant to the Outer Continental Shelf Act of 1953 and any amendments thereto.” This is a fundamental contradiction given that OCSLA is a statutory planning and permitting regime. Which regulations are subject to the EO?
Comments:
For some reason (too complicated?), EPA and the Army Corps of Engineers are given 30 days to provide a list of statutes that are subject to the EO. Perhaps all affected regulators should have been given 30 days to comment on the draft EO before it was finalized.
The EO is sure to create chaos as regulators, under the direction of managers keen on complying with the President’s directive, attempt to determine the EO’s applicability and establish implementation procedures.
The EO, which is intended to provide order and certainty, will do exactly the opposite. How does the regulated industry plan for future operations while this vague and controversial “zero based regulatory budgeting” exercise is ongoing? What are the chances of this directive being sustained?
Reducing the number of pages in the US Code, while desirable, is not regulatory reform.
The order assumes that most regulations are meaningless, which is not the case. What is the plan for filling the void after regulations are deleted?
The EO should embrace, rather than circumvent, the notice and comment requirements of the Administrative Procedures Act. The tedious and sometimes burdensome APA has protected the public and the energy industry from countless unjustified, unauthorized, and poorly considered regulatory initiatives.
Eliminating rules is not synonymous with establishing a regulatory framework that will improve efficiency and stimulate innovation.
Other factors are paramount in improving regulatory effectiveness and efficiency. These include regulatory fragmentation, effective goal setting, management systems, culture, data gathering, performance monitoring, continuous improvement, collaboration, and the adoption of industry standards.
Quality regulators are more important than quality regulations. Regulating with fewer rules requires skilled regulators.
Agencies should be directed to consider how they can best reduce the regulatory burden without compromising safety and environmental performance. Page reduction should be secondary.
If regulatory efficiency is the goal, this EO is likely to do more harm than good. Federal agencies are largely comprised of bright people with good intentions. Challenge them to propose innovative reforms that will simplify and improve their regulatory regimes.
Seafreeze Shoreside, Inc., Petitioner, Amicus briefs submitted by Green Oceans, Protect Our Coast NJ, America First Policy Institute, and the Save Right Whales Coalition
Given that the SCOTUS declined to hear a Vineyard Wind challenge by the Nantucket-based ACK for Whales group, the odds of the new challenges being heard would seem to be low. However, it’s noteworthy that both Vineyard Wind and the Federal Government have waived their right to respond to these petitions. The Government’s waiver to respond to the RODA petition is pasted below.
Yesterday, the California Coastal Commission voted 8-3 to fine Sable Offshore $18,022,500 for performing pipeline repairs necessary to minimize operating risks and comply with the FIre Marshall’s requirements.
“We have not gotten a foothold with Sable, and we’ve not gotten a foothold with Santa Barbara County either. So, we are where we are, and because of this absolute failure of communication and Sable’s, to be frank, absolute failure to follow the law, this hearing has become necessary,” Harmon said.
We’ll see how this gets sorted out in the courts. Sable appears to have a strong case against the Commission, but litigation in California courts is not exactly ideal for oil companies.
BSEE incident investigations are another window into OCS safety performance.
Panel reports are published for the most significant OCS incidents (e.g. fatalities, serious injuries, significant pollution). Unfortunately, these reports have been unacceptably delayed in recent years. Status reports are not provided leaving the public in the dark as to what is being investigated and why.
The more common investigations, conducted by BSEE’s district offices, are timely and informative. The Districts typically investigate lost time (>72 hours) injuries, crane and lifting equipment incidents, small fires, pollution events, property damage > $25k, gas releases, and other incidents requiring workers to muster for possible evacuation.
The number of District investigations in 2024 declined significantly to 31, one-third fewer than the average of 46.25 for the past 4 years.
Violations were not identified for 2/3 of the incidents.
A complete list of the 2024 District investigations follows. Hyperlinks are provided for those who want to review the reports.
Bud's Offshore Energy (BOE) 